Climate Change Scare and FDI Migration

Abstract

Does foreign direct investment (FDI) migration into Nigeria and Sierra Leone generate a climate change scare (CCS) based on the pollution haven-halo hypothesis? The quasi-experimental design study utilized data from the world development indicator, 1970-2019 using a nonlinear autoregressive distributed lag (NARDL) model to estimate the dynamic impact of FDI migration on CO2 emissions (a proxy for CCS). The study found that the change in FDI migration in Sierra Leone causes upward CO2 emissions. The positive impact of FDI migration on CO2 emission implies that the pollution haven hypothesis exists in Sierra Leone. Comparatively, dynamic FDI migration into Nigeria caused a mixed impact on CO2 emissions. The result found that an increase in FDI migration caused a decrease in CO2 emissions in Nigeria. Similarly, a decrease in FDI migration caused an increase in CO2 emissions. Also, the Wald F-test suggests a long-run asymmetry and symmetry between FDI and CO2 emissions in Sierra Leone and Nigeria, respectively. Hence, there is the presence of a pollution halo-haven issue in Nigeria. The study, therefore, recommends that green FDI financing that supports environment-friendly technology export into Nigeria and Sierra Leone that would enable optimal climate change control both in the short-and long-term. Thus, technology that efficiently improves environmental quality, preserves, and protects the ecosystem should be imported into Sierra Leone and Nigeria.